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The Land of Promised Dough: Monsanto in India

Monsanto Co, the world’s biggest seed company, threatened to pull out of India on March 2016 if the government imposed a big cut in royalties that local firms pay for its genetically modified cotton seeds.

Mahyco Monsanto Biotech (India)(MMB), a joint venture with India’s Mahyco, licenses a gene that produces its own pesticide to a number of local seed companies in lieu of royalties and an upfront payment. MMB also markets the seeds directly, though the local licensees together command 90 percent of the market. Acting on complaints of local seeds companies that MMB was charging high fees, the farm ministry last year formed a committee to look into the matter.

The committee has now recommended about a 70 percent cut in royalty, or trait fee, that the seed companies pay to MMB, government sources said. The farm ministry is yet to take a decision on the committee’s recommendation. “If the committee recommends imposing a sharp, mandatory cut in the trait fees paid on Bt-cotton seeds, MMB will have no choice but to re-evaluate every aspect of our position in India,” Shilpa Divekar Nirula, Monsanto’s chief executive for the India region, said in a statement…

Separately, MMB has filed a case in a Delhi court, challenging the authority of the committee to determine the trade fee agreed upon by MMB and a number of Indian seed companiesIn a partnership with Mahyco, U.S.-based Monsanto launched a GM cotton variety in India in 2002 despite opposition from critics who questioned its safety, helping transform the country into the world’s top producer and second-largest exporter of the fiber.

In a ruling on Feburary 2016, the Competition Commission of India, the antitrust regulator, said there were indications that MMB had abused its dominant position in the country and asked its director general to complete an investigation within two months. The government-appointed committee has also recommended cutting Bt cotton seed prices to about 800 rupees for a packet of 400 grams. Currently Bt cotton seeds are being sold between 830 and 1100 rupees in different parts of the country.